Agriculture: Process of Analysis
And Information Exchange        
Informal Paper: AIE/44            
16 November, 1998                  

FOOD SECURITY –AN IMPORTANT NON TRADE CONCERN

Informal Paper by India

1. The objective of the Agreement on Agriculture (AOA) was to bring about discipline in one of the most distorted sectors of trade, by, inter alia, disciplining the unrestricted use of production and export subsidies, as well as by reducing import barriers, including non-tariff barriers. Thus, the AOA sought to limit the extent of support granted by individual countries and attempted to ensure that countries adopt a more liberal policy as far as agricultural trade was concerned. At the same time, as indicated in the Preamble, the AOA recognised non-trade Concerns (NTCs) of countries. These NTCs amongst others include food security and the need to protect the environment.

2. However, this fine balance between trade and non-trade concerns, as mandated in the Preamble, does not appear to have been fully reflected in the provisions of the Agreement and consequently in its implementation. The major thrust of the Agreement appears to be based on the hypothesis that liberalisation is the panacea of all ills in the agricultural sector. While this may be tenable from a conventional economic view point, such a reasoning does not take into account the problems faced by a number of developing countries, which because of certain underlying constraints, have to necessarily take into account non trade concerns such as food security, while formulating their domestic policies. This is particularly true of developing countries, where a significant percentage of the population is not only dependent on the agricultural sector for its livelihood, but is also surviving just around the ‘poverty line’. In such countries a purely market oriented approach may not be appropriate. Instead, for some countries it may be necessary to adopt, what we would like to term a ‘market plus approach, in which non trade concerns such as the maintenance of livelihood of the agrarian peasantry and the production of sufficient food to meet domestic needs are taken into consideration. We, therefore, feel that at this juncture it is important to closely examine this aspect of the AOA, so as to ensure that the reform process in the agriculture sector takes into consideration the food security and other non trade concerns of countries like India.

3. Ensuring food Security, that is the access of the population to sufficient food to meet its nutritional requirements is a basic objective of governmental policies in agrarian developing countries. Hence, food security issues cover not only issues related to the availability and stability of food supplies but also to issues of access to this supply i.e. related to the resources that may be needed to procure the required quantity of food. It is therefore clear that issues related to food security are sensitive issues and hence countries in which a large percentage of population is dependent on this sector, would like to have a certain degree of autonomy and flexibility in determining their domestic agricultural policies. These policies would naturally be geared towards improving productivity, enhancing income levels, reducing vulnerability to market fluctuations, ensuring stability of prices etc. Inter alia, this would be achieved through reliability of production and supplies, so that seasonal variations in access to food are minimal. It is for this reason that national food production policies have been central to domestic agricultural policies not just for developing countries, but also for the developed countries who are net importers of food, as has been brought in the papers submitted by Norway and Japan. It is, therefore, clear that in this sense food security is a legitimate national concern and has been so recognised by the FAO. In fact, during the World Food Summit of 1996 "the importance for food security of sustainable agriculture, fisheries, forestry and rural development in low and high potential areas" was explicitly recognised. This recognition of the importance of food security even for low potential area clearly underlines a developmental perspective which goes beyond mere trade concerns, and is, therefore, germane to the outlook and interest of developing countries.

4. Let us, therefore, examine both the external and internal dimensions of this problem particularly from the perspective of developing countries.

5. Countries which argue and support rapid liberalisation of the agricultural sector contend that global food sufficiency would in a way ensure food security since countries could then produce what they are most competent and efficient in, while importing the rest of their food requirements. Such an argument presupposes that all countries would at all times have sufficient foreign exchange to procure their food requirements internationally. This assumption is obviously not true since not all developing countries would be in a position to import food grains, even if these were available at competitive prices, due to their limited foreign exchange reserves. Moreover, these countries often face cross sectoral pressures on their available funds, which further limits their capacity to procure internationally. This problem is further compounded in case there are unforeseen variations in the international prices.

6. Similarly, there are various internal constraints which if not appropriately addressed, would severely limit the capacity of developing countries to increase domestic production, to at least a certain minimum percentage of their requirement. Firstly, holdings are small and the majority of farmers belong to the small and marginal category. This limits any attempts to introduce mechanised farming and also constrains the adoption of new technologies unless accompanied by large scale extension programmes. Consequently, the productivity is low and the total production varies substantially, since a large percentage of the agricultural sector continues to be at the mercy of the vagaries of nature. Further, only a small percentage of what is produced finds itself in the market, the rest being used by the small and marginal farmers for sustenance or for simple barter. At the same time, there is increasing pressure on land from non agricultural users, both because of the rising level of urbanisation as also because of the geographic spread of industries. If this limitation on the availability of agricultrual land is viewed in the context of the growth in population, which most of the developing countries invariably face, it would be clear that the only way in which agricultural growth can be sustained and the objective of food security attained, would be through increased governmental support in the use of inputs, particularly in terms of irrigation, electricity, fertilisers, pesticides, technical know-how, high yielding varieties, infrastructural development, market support etc.

7. It is, therefore, clear that there are significant external and internal ramifications of attaining the objectives of food security. While it may not be possible to immediately ensure that developing countries are able to produce at least a certain minimum percentage of their annual food requirment, this is a goal which has to be pursued, particularly in light of the constraints that developing countries would face in adopting an external solution to this problem. Recognising the percentage of small farmers in the agricultural sector of most developing countries, it is clear that a major part of the financial burden of increased inputs would have to be met through governmental subsidies. It would need to be recognised that the small farmer would not be able to meet his principal responsibility without adequate support from government. Public intervention would therefore be necessary in order to achieve these national goals.

8. Finally, it needs to be said that agricultural self reliance forms a vital underpinning for the growth of their GDP of agrarian developing economies since good agricultural production provides purchasing power to a large majority of a population, which in turn spurts industrial growth. Self-sufficiency in food production has therefore a specific developmental perspective as opposed to a purely commercial perspective. Hence, it is our view that developing countries need to be provided the requisite flexibility within the AOA to pursue their legitimate non trade concerns. More specifically, developing countries need to be allowed to provide domestic support in the agricultural sector to meet the challenges of food security and to be able to preserve the viability of rural employment, as different from the trade distortive support and subsidies presently permitted by the Agreement. It is therefore important that a differentiation is made between such domestic support measures which are presently being used to carve out a niche in the international trade and between those measures which would allow developing countries to alleviate rural poverty.

9. India is anxious that the AIE process must therefore examine the manner in which developing countries can be provided additional flexibilities by appropriate adjustments to the provisions of the AOA, in order to enable them to pursue their legitimate non-trade concerns. India believes that a focussed discussion on the subject will contribute to increased awareness to the non-trade concerns of countries like India, such as food security and rural employment, and thus enable the WTO Membership to deal with the subject of continuation of the reform process in the Agricultural sector with sensitivity to these concerns.

Agriculture: Process of Analysis
And Information Exchange       
Informal Paper: AIE/30           
23 June 1998                          

ISSUES OF INTEREST TO DEVELOPING COUNTRIES

Informal paper by India

 India welcomes the papers submitted by Pakistan, Peru and the Dominican Republic (AIE/6) and the paper submitted by Cuba (AIE/12) on the issues of interest to developing countries. We would also like to thank the Secretariat for their paper on the special and differential treatment provisions relating to the Agreement on Agriculture (AIE/S6) and the studies on the implementation and impact of the Agreement on Agriculture on developing countries (AIE/S7). These papers provide extremely useful factual data in the context of the issues which have been highlighted by delegations regarding the special and differential provisions for developing countries.

1. India would like to reiterate the importance that it attaches to the special and differential treatment provisions as provided for in the Agreement on Agriculture. Since we are in a process, which we hope will help to clarify some of the issues which are likely to be deliberated upon during the new round of negotiations, it would not be out of context to recapitulate some of the concerns which developing countries had during the UR and which were sought to be allayed by the S&D provisions.
2. As is well known a large number of developing countries are predominantly agrarian countries where a very large percentage of the population is dependent on agriculture for its livelihood. While in the initial years the main concern of these Members was to ensure food sufficiency, this concern, once fulfilled, gradually evolved into a concern of finding markets for their agricultural surpluses, so as to ensure the continued provision of agricultural livelihood to this large population. During the UR these concerns got manifested into two broad areas. The first of these broad provisions related to domestic support which allowed developing countries to provide assistance, whether direct or indirect, to encourage agricultural production as an integral part of the overall objective of rural development. The second area related to the market access, where it was felt that there was a need to improve access for developing country Members by improving both the opportunities and terms of access for agricultural products of interest to these Members.
3. These two very broad aspects were sought to be translated in to specific provisions for the developing countries. As highlighted in the Secretariat paper AIE/S6 there are five broad areas where special and differential provisions have been provided for in the AOA. These include the following, which in our view merit detailed deliberations:

1. market access;
2. food security, with specific reference to net food importing countries;
3. domestic support commitment;
4. export subsidy commitment; and
5. notification requirements and technical assistance

1. All these five areas need to be considered in detail during the course of this informal process of analysis and information exchange since they have important ramifications for developing countries. For example in the context of the improved market access which the Agreement had sought to provide to developing countries, India would like to draw attention to the first special and differential treatment provision highlighted in the Secretariat doc. No. AIE/S6. The preamble of the Agreement specifically mandates developed countries to provide greater opportunity and market access to the agricultural products of interest to developing countries. Unfortunately, however, the status of implementation as far as this provision is concerned is not totally clear from the information provided in the Secretariat paper. Members have already highlighted some of the specific areas where we need additional information to correctly evaluate the impact of the Uruguay Round. We would like to highlight one specific area where we need certain clarifications. On page 2 of the Secretariat paper AIE/S6 it has been indicated that there has been a "greater-than-average reduction in tariffs on products of interest to developing countries". The factual situation would perhaps have been clearer if figures relating to specific products had been provided. We no doubt agree that compiling data for all products may not be possible but it would be helpful if this committee could analyse the post-UR status for at least some products of interest to developing countries. In this context, we would like to draw attention to a World Bank Policy Research Working Paper titled "Agricultural Trade Liberalisation in the UR", in which it has been indicated that the post UR base tariffs of a number of sensitive commodities in many industrialised countries are higher than the actual tariff equivalents of all border measures which existed in 1986-88. For instance, for rice, which is of particular interest to India, the World Bank had calculated that the tariff differential for a particular group of countries had increased by as much as 207%. It would therefore be helpful if the Secretariat could perhaps provide additional data as far as some specific products are concerned, since this would help us to better analyse the impact of the AOA on developing countries.
2. Similarly issues of food security also need to be adequately addressed. The preamble to the Agreement specifically highlights the need for Members to take into account non trade concerns such as food security. While this term has been extensively used in the past, we are not entirely sure whether the objectives relating to food security which have so clearly been spelt out in the preamble, have been met. In this context it may be mentioned that it was in the Bali Declaration of the Non-Aligned Movement that an attempt was made, perhaps for the first time, to define food security. The Declaration recognised that in spite of substantial increase in the world’s food output, the number of people suffering from hunger and malnutrition had increased in many developing countries. India therefore feels that it is extremely important that one of the goals of agricultural trade liberalisation remains, the achievement of the objective of food security. It would be perhaps too simplistic to assume that agricultural liberalisation would by itself be able to overcome the problem of food security. Free trade in agriculture is not without its long term social and economic ramifications. India would therefore like to suggest that it would help to clarify Member’s perception, if during this process of analysis and exchange of information the Committee consider certain specific examples where agricultural liberalisation may have had some undesirable effects, specially from the point of food security. This would help identify those areas, policies and practices which may have had such an effect and which the impending round of negotiations would provide an opportunity to rectify.
3. Issues relating to domestic support commitments, export subsidies, notification requirements and technical assistance also need to be similarly examined. A good way would be to encourage developing countries to submit papers on these issues. However, it may be necessary for the Secretariat to provide technical assistance to these delegations so that they can appropriately organise their country experiences in the form of submission papers.
4. In this context we also support the suggestion made earlier, that organisations like FAO, UNCTAD, WORLD BANK, etc. which have done some excellent work in this area are invited to make general contributions on issues of interest to developing countries, particularly regarding the implementation and impact of the Agreement on Agriculture. These contributions could be in the form of papers which the Secretariat could circulate to Members. The relevant organisations could then be invited to a special meeting of the AIE process when their papers can be taken up for consideration.
5. We have highlighted only some of the issues of interest to developing countries. As evident there are a number of other critical areas and issues which need to be addressed during the course of the Analysis and Information Exchange process. Some of these we have listed in para 3 above. Others have been identified in the papers submitted by Pakistan, Peru, Dominican Republic and Cuba. This list is obviously not exhaustive. We would therefore suggest that as the Committee deliberates on the special and differential provisions, an evolving check-list of issues of interest to developing countries is prepared. This would help focus further work on special and differential treatment in the context of market access, food security, domestic support, notification requirements, special safeguards and technical assistance.